Price Book Value & Tobin's Q: Which One is Better For Measure Corporate Governance?

Abstract

This article aims to prove which proxy (Price Book Value-PBV- or Tobins Q) are better to measure firm value. Measurement of Corporate Governance (CG) is performed on the sub-sectors of agriculture and mining companies listed on the Indonesia Stock Exchange. This research tested the 41 companies in the sector of Agriculture and Mining sub-sector with purposive sampling technique (the analysis period 2010-2014) using OLS. The results showed no influence on the CG PBV although controlled by the firm's financial variable characteristic. Meanwhile, the Audit Committee has a positive influence on Tobins Q and firm’s size has the opposite effect on the Tobins Q. In general, this research recommends the use of Tobins Q as a proxy measurement of firm value.

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